Walmart buys controlling stake in India's Flipkart for $16 billion
- Author: Zachary Reyes May 10, 2018,
May 10, 2018, 21:52
That includes its decision last month to sell its British unit, Asda, which primarily operated a chain of traditional supermarkets. Amazon, Flipkart's chief rival in India's fast-growing online retail sector. In the fiscal year ended March 31, Flipkart recorded GMV of $7.5 billion and net sales of $4.6 billion. Flipkart sealed the world's largest e-commerce deal yesterday with Walmart, cementing India's place in the global e-tailing league. This emphasizes the fact that Flipkart holds a strong share in the electronic segment, taking over which could have increased the opportunities for expansion.
As it turned out, the rise of heavily-financed competitors such as SoftBank-backed Snapdeal, Alibaba-backed Paytm and Amazon put paid to any such hopes of a quick road to profitability for Flipkart.
The way the two, who are not related, formerly worked for Amazon.com Inc and founded Flipkart by selling books before selling everything from soaps to smartphones and from books to clothes, turned out to be a guidebook for many. It now allows for a variety of payments, from credit cards to gift cards to direct bank transfers. Backing 49+ Indian startups, nearly three startups are added to the gang every month, taking the Flipkart Mafia's strength to a massive 250+ startups.
"This shows that global companies have faith in the Indian market and they are looking for opportunities to invest", Aditya Manya, vice chairman and president of investment firm Kalpataru Multiplier Ltd., told Anadolu Agency.
Amazon had been considering making its own offer for the Indian firm, which has more than 100 million users. "Since the deal has a greater ramification on India's retail trade, a closer scrutiny is certainly warranted" said CAIT in a statement said. "Most of these small entrepreneurs are already battling for their existence; entry of Walmart will further create problems for them", the SJM's co-convenor said in his letter. The remainder of the online shopping company will be owned by its existing investors, including Microsoft, Flipkart co-founder Binny Bansal, Chinese conglomerate Tencent Holdings, and hedge fund Tiger Global Management.
The deal will probably not do much to change market share between Flipkart and Amazon in India, said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group. According to CB Insights, Accel Partners had invested in a $60 million secondary market transaction in 2010, when Atlassian was valued at $400 million. The apparel segment has the second highest share of 31 per cent in the e-commerce retail industry.
Walmart, which operates stores under various banners in 27 countries outside the USA, has faced strong headwinds in its expansion.
However, Walmart's CEO Doug McMillon told media in New Delhi on Thursday that it was open to the idea of setting up stores via a franchise model in the future. In Mexico, Canada and Japan, it's won shoppers over time.